In 1865, France, Belgium, Italy and Switzerland signed a monetary convention
(later known as the Latin Union), which provided for the intercirculation
of specie between member states. Conventional analyses of the treaty (such
as that by Willis) have portrayed this arrangement as a by-product of French
power politics. This article seeks to reinterpret the economic nature of the
Latin Union, focusing on the interrelations between trade, finance and money.
I argue that the Latin Union did not foster trade integration and that, as
a matter of fact, such was not its objective, according to archival evidence.
Instead, I suggest that the Latin Union was the result of the growth of France
as a major supplier of capital. The need to provide French investors with
exchange-rate guarantees led borrowing countries to tie their respective monetary
systems to that of France. This, in turn, created opportunities for international
monetary action and the French franc became the ‘natural’ focal
point of projects of monetary unification. This evolution, however, had structural
limits which help to explain the downfall of the projects for expansion of
the Latin Union.